Total existing home sales, which are completed transactions that include single family homes, town homes, condominiums and co–ops, fell 4.8% to a seasonally adjusted annual rate of 5.31 million in August from a slight downward revision of 5.58 million in July.
While none of the four major regions saw sales increase in August, the index report from the National Association of Realtors (NAR) says that sales have risen year on year for 11 consecutive months and are 6.2 % above a year ago.
Lawrence Yun, NAR chief economist, explained that home sales in August lost some momentum to close out the summer. ‘Sales activity was down in many parts of the country last month, especially in the South and West, as the persistent summer theme of tight inventory levels likely deterred some buyers,’ he said.
‘The good news for the housing market is that price appreciation the last two months has started to moderate from the unhealthier rate of growth seen earlier this year,’ he added.
The index also shows that the median existing home price for all housing types in August was $228,700, which is 4.7% above August 2014 when it was $218,400. The market has now seen 42 months in a row of year on year gains.
The report also shows that total housing inventory at the end of August rose 1.3% to 2.29 million existing homes available for sale, but is 1.7% lower than a year ago. Unsold inventory is at a 5.2 month supply at the current sales pace, up from 4.9 months in July.
‘With sales and overall demand higher than a year ago and supply mostly unchanged, low inventories will likely continue to limit options for those looking to buy this fall even with the overall pool of buyers shrinking because of seasonal factors,’ said Yun.
The percent share of first time buyers rebounded to 32% in August, up from 28% in July and matching the highest share of the year set in May. A year ago, first time buyers represented 29% of all buyers.
Yun believe that when the Federal Reserve decides to lift short term rates, which is expected later this year, the impact on mortgage rates and overall housing demand will likely not be pronounced.
‘With job growth holding steady, prospective buyers can handle any gradual rise in mortgage rates, especially if today's stronger labour market finally leads to a boost in wages and homebuilding accelerates to alleviate supply shortages and slow price growth in some markets,’ he added.
NAR released a study earlier this month that examined new home construction in relation to job gains. The findings revealed that home building activity is currently insufficient in a majority of metro areas and is contributing to the ongoing housing shortages and unhealthy price growth in many markets.
Properties typically stayed on the market for 47 days in August, an increase from 42 days in July but below the 53 days in August 2014. Short sales were on the market the longest at a median of 124 days in August, while foreclosures sold in 66 days and non–distressed homes took 45 days. Some 40% of homes sold in August were on the market for less than a month.
The report also show that all–cash sales decreased slightly to 22% of transactions in August from 23% in July and are down from 23% a year ago. Individual investors, who account for many cash sales, purchased 12% of homes in August, down from 13% in July and unchanged from a year ago. Some 60% of investors paid cash in August.
Matching the lowest share since NAR began tracking in October 2008, distressed sales, that includes foreclosures and short sales, remained at 7% in August for the second consecutive month and compared with 8% a year ago.
The data shows that 5% of August sales were foreclosures and 2% were short sales while foreclosures sold for an average discount of 18% below market value in August and compared to 17% in July, while short sales were discounted 12%, unchanged from July.
NAR president Chris Polychron, pointed out that a large majority of realtors have taken some form of training to prepare for new disclosure requirements. ‘As the ruling goes into effect next month, communication is crucial between all parties involved in a real estate transaction to ensure consumers get to closing seamlessly and without delay. NAR will monitor the progress of the rule in the weeks ahead and will share any concerns that arise as part of our continued partnership with the Consumer Financial Protection Bureau,’ he added.
A breakdown of the figures show that single family home sales declined 5.3% to a seasonally adjusted annual rate of 4.69 million in August from 4.95 million in July, but are still 6.1% above the 4.42 million pace a year ago. The median existing single family home price was $230,200 in August, up 5.1% from August 2014.
Existing condominium and co–op sales declined 1.6% to a seasonally adjusted annual rate of 620,000 units in August from 630,000 units in July, but are still up 6.9% from August 2014 while the median existing condo price was $217,400 in August, which is 2.2% above a year ago.
August existing home sales in the Northeast were at an annual rate of 700,000, unchanged from July and 6.1% above a year ago. The median price in the Northeast was $271,600, which is 2.4% above August 2014.
In the Midwest, existing home sales declined 1.5% to an annual rate of 1.28 million in August, but remain 5.8% above August 2014. The median price in the Midwest was $181,100, up 4% from a year ago.
Existing home sales in the South fell 6.6% to an annual rate of 2.14 million in August, but are still 5.9% above August 2014. The median price in the South was $196,300, up 6% from a year ago.
Existing home sales in the West dropped 7.8% to an annual rate of 1.19 million in August, but remain 7.2% above a year ago. The median price in the West was $321,300, which is 7.1% above August 2014.
